Insolvency rumors have recently been hurled against cryptocurrency billionaire Sam Bankman-Fried's FTX Trading after rival Binance Holdings announced plans to liquidate all of its holdings of FTX's native FTT tokens.
The announcement prompted users to hurry to the exchange to start making withdrawals from their accounts.
In response to concerns about possible insolvency, Bankman-Fried tweeted, "FTX is fine. Assets are fine."
"FTX has enough to cover all client holdings," Bankman-Fried wrote. "We don't invest client assets (even in treasuries). We have been processing all withdrawals, and will continue to be."
Last week, CoinDesk revealed that FTX sister company Alameda Research's balance sheet was laden with FTX's native exchange token FTT. This sparked a public spat between Alameda CEO Caroline Ellison and Binance CEO Changpeng Zhao, who also owns a substantial amount of FTT tokens.
Noting the revelations in the CoinDesk article, Zhao stated that his exchange would begin liquidating any remaining FTT on its books.
Ellison responded on Twitter, saying Alameda was prepared to buy any amount of FTT Binance wanted to offload for $22 each (about the price at the time).
Zhao appeared to reject Ellison's offer in a tweet Monday afternoon, stating Binance will "stay in the free market."
In addition to the documents that may have influenced Binance's decision to sell its token holdings, Bankman-Fried recently received criticism from the crypto community for his remarks regarding regulation.
He published an "industry norms manual" in October that advocated for more stringent regulation of websites dealing in decentralized finance, including the need to censor transactions, establish whitelists, and other things. That quickly generated debate and angst inside the sector and garnered condemnation from industry insiders.
Zhao did not explain the exchange's decision to sell its FTT holdings; he merely stated that it is taking place and that it will take some time to complete.
"As part of Binance's exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT)," Zhao said. "Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books."
Zhao also stated that Binance is not involved in the rumors and that the liquidation is not meant to harm FTX, stating that it was "just post-exit risk management, learning from LUNA." This is a reference to the catastrophic collapse of the Terra-LUNA stablecoin ecosystem, which wiped nearly $60 billion off the market.
